Reports from the Economic Front

a blog by Marty Hart-Landsberg

The GM bailout

The GM bankruptcy is indeed big news—unfortunately it is also another example of problematic reporting.

We are encouraged most of all to worry about the “huge” government bailout to the company—some $30 billion dollars on top of a previous $17 billion.  The slogan seems to be: Forget the crisis! Worry about the deficit!

Missing is perspective.  For example, the US government has been spending $12 billion a month to fight the war in Iraq.  Thus we have the equivalent of some three bailouts a year but we never hear a critical voice about this spending and its deficit producing consequences.  And there is every reason to believe that the US government is determined to continue spending huge sums of money in Iraq and Afghanistan, again with little media attention.

We are told that the president plans to withdraw our forces from Iraq in stages.  The first stage is withdrawal from Iraqi cities by June 30.  However, as the Christian Science Monitor reports, not much is likely to happen:

On a map of Baghdad, the US Army’s Forward Operating Base Falcon is clearly within city limits. Except that Iraqi and American military officials have decided it’s not. As the June 30 deadline for US soldiers to be out of Iraqi cities approaches, there are no plans to relocate the roughly 3,000 American troops who help maintain security in south Baghdad along what were the fault lines in the sectarian war. “We and the Iraqis decided it wasn’t in the city,” says a US military official. The base on the southern outskirts of Baghdad’s Rasheed district is an example of the fluidity of the Status of Forces Agreement (SOFA) agreed to late last year, which orders all US combat forces out of Iraqi cities, towns, and villages by June 30.

Equally troubling is the fact that while the government may eventually reduce the number of troops fighting in Iraq and Afghanistan, it is rapidly increasing the number of private contractors.  As Democracy Now reports:

Newly released Pentagon statistics show the number of armed contractors in both Iraq and Afghanistan is rapidly rising. The number of military contractors in Afghanistan increased by 29 percent in the second quarter of 2009. The number in Iraq jumped by 23 percent. Independent journalist Jeremy Scahill reports there are now over 240,000 private contractors working in Iraq and Afghanistan.

Problems with the GM reporting go far beyond spending.  The media uncritically reports the president saying that the government is “acting as a reluctant shareholder.” By this he means that there is no justification for the government to take any decision-making role in the company despite becoming its majority shareholder.

Lets see–private profit-making led to crisis for the company and industry, requiring public bailout, but it would be irresponsible for the public to play a major role in shaping or directing (in partnership with the workers) a new plan for the company and industry.

Sounds a lot like the banking sector–and after giving private financial interests trillions of dollars to do with as they want we still don’t have a finance sector that is responsive to public needs.  We appear to be making the same mistake with the auto industry and for the same reason–those in charge oppose real change.   They seem clear on their interests–what about us?

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